Category: Economics
The top private sector employers of economics graduates
Here is the link.
Trump Administration Limits Predatory Lending in Education
The New Republic writes “President Trump is banning students majoring in degrees that don’t make enough money from taking out college loans.” Yes, but do note that no student is banned from any major and the lending rule is mild. Undergraduate programs must show:
that their graduates earn more than the typical high school diploma holder…[and] graduate programs will be required to demonstrate that their graduates earn more than the typical bachelor’s degree holder. (emphasis added).
Think about how low that bar is. The comparison group for an undergraduate program is working adults aged 25-34 with nothing more than a high school diploma. A college program that can’t beat that has almost certainly made its students worse off. For graduate programs the bar is the lowest of several bachelor’s benchmarks, including bachelor’s holders in the same field. A master’s in social work need only beat people with a bachelor’s in social work. A program must also fail in two out of three years before it loses loan eligibility. The Department estimates that about 5% of programs will fail in the first year.
I mocked the term “predatory lending” when it first became common in the financial crisis but in this case predatory lending fits the bill because the real borrower isn’t the individual student. Under income-driven repayment, the taxpayer is a forced co-signer, and it’s the taxpayer who gets predated.
Most expansions of the student loan program have been motivated by the picture of an enterprising student who works hard and wants to major in mechanical engineering or nursing but because of their poor circumstances they can’t afford college. “Credit constraints, asymmetric information, you can’t collateralize human capital,” said the economists. Nice theory, what’s the practice?
The economists wanted loans for good investments and insurance against bad luck but the economists can’t swing the vote and once the government is lending, colleges want more tuition money and students want more forgiveness. The result is a subsidy for programs whose graduates are never likely to repay. As Looney and Yannelis document:
Starting in the late 1990s, policymakers weakened regulations that had constrained institutions from enrolling aid-dependent students. This led to rising enrollment of relatively disadvantaged students, but primarily at poor-performing, low-value institutions whose students systematically failed to complete a degree, struggled to repay their loans, defaulted at high rates, and foundered in the job market. As these new borrowers experienced similarly poor outcomes, their loans piled up, loan performance deteriorated, and with it the finances of the federal program.
Indeed, the program worked in reverse of what was promised. The biggest subsidies went to programs whose graduates were least able to repay, rather than programs with the strongest case for public support. As I wrote earlier:
Looney does a back of the envelope calculation and estimates that typical graduates in Mechanical Engineering will on average get a 0% subsidy but graduates in Music will get a 96% subsidy, in Drama a 99% subsidy and Masseuses a 100% subsidy on average. This of course is exactly the wrong approach. If we are going to subsidize, we should subsidize degrees with plausible positive spillovers not masseuses.
The courts later blocked Biden’s Save plan but the problem is built into income-driven repayment. If music, drama and masseuses are promised a 95%+ subsidy who is paying? The taxpayers. Moreover, it’s even worse than this because the very existence of these loans incentivizes the creation of expensive, useless programs. It’s not just the drama colleges, however. Not surprisingly, the law schools have proven adept at using Public Service Loan Forgiveness (PSLF) to rip off the taxpayer. The school raises tuition, then covers the student’s small income-driven payments for ten years, and the taxpayer forgives the rest. In short, protecting students from the cost of failure rewards colleges for producing it.
Fortunately, the same bill limiting loans ended Grad PLUS loans and capped graduate borrowing. You can see the logic: if taxpayers are going to insure the loans, they need some say over which programs qualify and how much is borrowed. I don’t like giving government that power, but this is the Mises–Higgs intervention ratchet in action: subsidize the loans, absorb the losses, then regulate the programs to limit the losses.
My ideal program would get the government out of the student loan business altogether but until then this is a good first step at limiting one of the most expensive and wasteful programs of the federal government.
Shipping to America
The vulnerability of our shipping routes remains underdiscussed, perhaps that is in some ways a good thing:
We study the macroeconomic and trade-policy implications of disruptions to U.S.-bound shipping routes. Standard models treat them as iceberg-cost shocks, conflating the shock with the response to it. Using satellite vessel-tracking data, we construct route-level measures of potential and effective capacity for all U.S.-bound container ships from 2016 to 2025. Utilization losses in recent disruptions ran 20 to 40 percentage points, and began months before port congestion became visible. We embed these measures in a general equilibrium model in which firms reallocate a common fleet without internalizing the congestion they create and price above marginal cost, while importers’ sourcing responds to route profitability. The reallocation triggered by a disruption then has first-order welfare effects, and the route’s Domar weight is not a sufficient statistic for its welfare cost. The 2021 West Coast crisis and the 2023-2024 Red Sea attacks cost 0.69% and 0.35% of output. Naval protection of Red Sea shipping generated benefits of 0.04-0.08% of output at a fiscal cost of 0.02%. Tariffs decongest the routes they tax, offsetting or even reversing their conventional welfare cost.
That is from a new paper by
Accounting for Cross-Country Income Differences Revisited
Also known as Why I Do Not Believe in the Housing Theory of Everything:
Development accounting is the search for proximate sources of cross-country income differences. This article describes how knowledge in this field has evolved over the two decades since the influential work of Caselli (2005). There have been large advances in the measurement of production inputs (labor, physical capital, and human capital). These advances have raised the estimated contribution of inputs, mostly human capital, in development accounting. Our preferred estimate is that inputs account for 55–70 percent of gross domestic product (GDP) per worker differences, versus 30 percent using the classic specification. The literature has also made progress in moving away from Cobb-Douglas production functions and measuring factors such as management quality that were previously bundled into total factor productivity (TFP). Our review highlights the new implications of these advances, areas where future research would be beneficial, and the limitations of development accounting.
That is from a new NBER working paper by
The Macroeconomic Effect of AI through software engineering
We measure how artificial intelligence (AI) affects the economy through its impact on software engineering productivity. We use information from financial markets to develop a forward-looking measure that is available in real time. We estimate the sensitivity of each firm’s stock return to an AI stock market index, and how this sensitivity depends on the share of firm payroll in software engineering. We use a model to map this cross-sectional relationship into software engineering productivity gains. From November 2022 to December 2025, AI increased the market’s expected present value of software engineering productivity by the equivalent of a permanent 32.6% productivity increase. The corresponding effect on the level of GDP is 3.6% in the baseline and 6.5% when higher software engineering productivity also raises R&D productivity. By mid-2026, amid rapid progress in coding agents, the effect of AI on productivity and GDP had more than doubled relative to the end of 2025.
That is a new NBER working paper by
Defining the Unemployment Rate
An updated version of our Marginal Revolution University (MRU) video on defining the unemployment rate. Free to use for anyone but goes best, of course, with Modern Principles of Economics, the best principles of economics textbook.
The Federal Lands: An Economic Property Rights Perspective
The US federal government owns and administers 472,892,659 acres or 21% of the land area of the lower 48 states, the country’s largest landowner. The resource is held and managed as a collective resource, the Federal Lands, through political and bureaucratic interpretation of the Multiple Use principle and generally, the biological aim of maximum sustained-yield. By contrast, access, exchange, and investment for most other US natural resources are through private property rights and markets. Despite the magnitude of the resource, economists have devoted relatively limited attention to the economic and welfare impact. The objective is to suggest economic implications and to encourage additional economic analyses. The discussion summarizes federal lands privatization through 1891, when withholding of federal lands began. The literature reveals no demonstratable market failure or increased resource scarcity from private exploitation between 1870 and 1957 when most lands were withheld. Because land was nonmobile and observable private property rights could have been assigned and any externalities addressed via Pigouvian restrictions or Coasean exchange. Federal ownership was not obviously required. Progressive Era reformers, driven by concerns of impending resource depletion, called for scientific, sustained-yield management by government officials. The institutional change is economically important. As outlined by Dixit and others, private rights holders have high powered incentives for efficient resource use that are lacking in decision making by agency officials who do not hold exchangeable property rights and do not directly bear the economic costs and benefits of their actions. Consequential public goods delivery could be an offset, but these are not measured for tradeoff calculations. Following Krueger, a rent-seeking framework is presented for comparing outcomes with economic property rights and political management. The analysis suggests that a.) federal lands will have lower production value than comparable private, all else equal; (b). federal lands management will be less responsive to shifts in economic costs and benefits. Public goods may be provided for high amenity, recreation, and ecological areas, but the dominant Multiple Use management principle provides no objective criteria for allocation or for periodic outcome assessment and adjustment. A literature review and data for contemporary federal forests, range, and oil and gas lands are provided.
That is from a new paper by Gary D. Libecap.
Good points from James Gilliland
It pains me to say this, but if we actually “get AGI,” the resulting boom in industrial capacity from robotics and massive society-wide wealth creation will look like a total vindication of neoliberalism.
The discourse about financialization and offshoring being a generational mistake may be replaced by a very different historical interpretation: that the late 20th and early 21st centuries were an enormous capital-accumulation phase, freeing up civilization-scale pools of liquid capital that could ultimately be deployed to accelerate and bring about the most consequential technological phase-change in human history.
In that telling, what looked like deindustrialization and betrayal from inside the period (I grew up in the Rust Belt, I know) becomes the prelude to reindustrialization on an almost unimaginable scale.
None of this is inevitable. The needle has certainly not been threaded. China and x-risk remain enormous contingencies. But if it is, I suspect the future will look back on the last 50 years very differently than we do today.
Here is the link.
CA 91326: A Public Choice Mystery Investigation
Carl Danner writes to me with a political economy mystery. On Sept 9, 2026, The California Public Utilities Commission announced a set of clean energy grants but only “for eligible organizations headquartered in ZIP Code 91326.”
I decided to investigate with ChatGPT. The first thing we discovered is that:
The ZIP-code restriction is about the Aliso Canyon gas leak. More specifically, this is money ultimately intended to benefit residents of Porter Ranch and nearby communities affected by the 2015–16 Aliso Canyon disaster, not a generic clean-energy grant that happens to be located there.
The Aliso Canyon gas leak was a big deal with thousands of families evacuated for months so it’s not surprising that money is allocated to that problem but note that the grants are not for organization serving the people or region affected by the gas leak (which is much larger than zip 91326) but for an organization headquartered in ZIP Code 91326. I smelled a payoff. So I pushed ChatGPT to investigate:
It may be [a payoff], but the evidence supports a narrower claim: the Round 3 rules look unusually tailored to make Save Porter Ranch a likely recipient.
The strongest facts are:
- The legislature appropriated $2 million from the Aliso Canyon Recovery Account for CBO outreach in Los Angeles County, prioritizing a broad “Aliso Canyon Disaster Area” containing 11 communities—not Porter Ranch alone.
- CPUC’s first round distributed roughly $1.3 million through a normal competitive process across multiple organizations.
- For Round 3, CPUC suddenly restricts eligibility to organizations headquartered in the single ZIP code 91326, with a maximum award of $75,000 and exclusion of previous recipients.
- Save Porter Ranch is headquartered at 19360 Rinaldi Street, Porter Ranch, CA 91326 and has been an active participant in CPUC proceedings concerning Aliso Canyon for years.
That is suggestive because the legislative authorization itself does not appear to require this hyper-local 91326 restriction. It defines the relevant disaster area much more broadly. CPUC therefore seems to have exercised administrative discretion to create a tiny eligibility pool.
I would distinguish three possibilities:
- Benign geographic set-aside: CPUC noticed that none of the first-round money had gone to an organization actually based in Porter Ranch and reserved the final $75,000 for a local group.
- De facto earmark: CPUC knew that Save Porter Ranch was one of very few qualifying CBOs in 91326 and wrote the eligibility rule sufficiently narrowly that it was highly likely to win.
- Quid pro quo/payoff: the money was deliberately directed to Save Porter Ranch in exchange for support, silence, settlement behavior, etc.
We have substantial circumstantial evidence for #2, but I have seen no evidence yet for #3. Calling it a “payoff” requires some evidence about why CPUC created the ZIP restriction or about communications with Save Porter Ranch.
I wasn’t satisfied so I pushed the investigation deeper and ChatGPT investigated the legislative history. It found that
The 91326 restriction did not originate with CPUC staff. The Legislature itself inserted it into the 2026 budget cleanup bill, and it is unusually specific….The evidence [for a payoff] is considerably stronger than I thought.
…If I were writing this up now, the sharp factual formulation would be: “In an August 2026 budget bill, the California Legislature quietly directed the CPUC to hold an otherwise-unplanned third grant round restricted to nonprofits headquartered in a single Porter Ranch ZIP code. One conspicuous beneficiary of that restriction is Save Porter Ranch, the local Aliso Canyon advocacy organization, which had previously helped lobby state officials over how Aliso Canyon penalty funds should be spent.”
I then asked ChatGPT to “look for overlap in Save Porter Ranch and CA legislatures, e.g. spouses, children, business partners.” It replied:
The strongest link is Richard Mathews. Save Porter Ranch’s IRS filings list Mathews as a director alongside Matt Pakucko and Kyoko Hibino. Mathews is also the longtime president of the North Valley Democratic Club. He previously served as a regional vice chair of the Los Angeles County Democratic Party and on the California Democratic Party executive board and its Legislation Committee.
That puts a Save Porter Ranch director directly inside the local/state Democratic Party apparatus, not merely in occasional contact with elected officials.
…the Mathews connection is stronger than I expected. This isn’t just an advocacy organization obtaining support from politicians. One of Save Porter Ranch’s three disclosed directors was simultaneously a fairly senior Democratic Party insider whose political club includes and supports legislators involved in the relevant legislative machinery.
…The missing piece remains the most important one: who requested the sentence “headquartered within ZIP Code 91326”?
I enjoyed the fact that ChatGPT seems excited by the new discoveries! Digging deeper:
That gives us a much tighter network than we had initially:
Save Porter Ranch
→ director Richard Mathews
→ president, North Valley Democratic Club
→ Schiavo and Gabriel are identified as club members / repeatedly endorsed by it
→ Schiavo sits on Budget + Utilities & Energy and represents the affected area
→ Gabriel chairs Assembly Budget
→ August 28 Assembly budget amendments insert a bespoke ZIP-code restriction
→ restriction makes Save Porter Ranch an unusually obvious potential recipient.There is another revealing feature. The amendment was handled as part of a budget-bill junior rather than through ordinary policy legislation. The public legislative history is extraordinarily thin: amendment August 28, withdrawn from committee August 30, passed August 31. Neither Gabriel’s Assembly presentation nor Laird’s Senate presentation told legislators that the “third round” was actually limited to one ZIP code. Gabriel merely said CPUC must offer “a third round of unspent funds”; Laird similarly described a third round “as specified.” The Assembly passed it 72–0.
That doesn’t demonstrate corruption, but it is exactly how a highly localized legislative earmark can pass with effectively zero scrutiny.
Alas, “the remaining decisive evidence probably isn’t indexed on the web.” Still, you get the idea.
Of course, this is small potatoes by the standards of California political/regulatory friends and families but it’s a nice case study in political economy. How do we want government to work? Is this ethical? What if the sums were much larger? What if the funds went to an equally well-connected group but for a less justifiable cause?
It’s always surprised me that most public choice is not done in this micro-history way. My early paper on the Separation of Commercial and Investment Banking: The Morgans vs. The Rockefellers (which was inspired by Burch’s magnificent Elites in American History which hardly any public choice scholars know) is one of the few examples. I could have done many more papers along those lines but archival history didn’t appeal to me although I did learn a lot digging through Carter Glass’s papers at UVA. I suppose economists like models and consider this sort of thing journalism or history at best.
If you want more details on CA 91326 you can read my whole conversation with ChatGPT.
My economics-rich Conversation with Gita Gopinath
Here is the audio, video, and transcript. Here is the episode summary:
Gita Gopinath has spent the last several years inside the room where the world’s monetary plumbing gets fixed — or doesn’t. As first deputy managing director of the IMF and, before that, the Fund’s chief economist, she worked on sovereign debt restructuring, followed Argentina’s disinflation up close, and built her academic reputation on ideas like dollar dominance and the dominant currency paradigm. Now back at Harvard launching a new Global Economics Lab, her conversation with Tyler ranges from why exchange rates don’t adjust the way models predict, to what stablecoins really cost, to whether AI’s growth dividend will show up on schedule.
Tyler and Gita discuss why trade balances are only weakly related to real exchange rates, before turning to Argentina, Milei’s fiscal discipline, the peso, and dollarization. Then they discuss whether economists got the euro wrong; whether trade imbalances with China are really the problem; stablecoins, CBDCs, and the Treasury market; and whether AI will ease the debt burden, cause stagflation, or transform economics itself. Finally, they turn to her family’s Kerala roots: why the state keeps electing communists, the relationship between matriarchy and social indicators, single-sex education, and what she’s building next.
Excerpt:
COWEN: Now, Scott Sumner argues we shouldn’t be worried about trade imbalances at all. We don’t worry about them across American states. A lot of the EU has a pretty big current account surplus. Not many people are worried about that. Yet when it comes to China, the talk is all about trade imbalances. Scott argues that’s more of a political project than an actual economic argument. Do you agree with Scott or not?
GOPINATH: I would agree with Scott along the following lines, which is that the trade imbalance in and of itself is not something that we should be focused on. I think what we care about is welfare, and welfare involves jobs and consumption, what’s inflation, purchasing power, and so on. People do not wake up in the morning saying, “Okay, my current account deficit is too big, or my current account surplus is too big.” If all of your policies that were delivering good outcomes for your country were to bring along a deficit or a surplus, that’s perfectly fine. There are lots of good reasons to be running deficits and surpluses we know. There’s nothing that tells you that you shouldn’t.
The problem arises when you have policies that countries have in place that are inconsistent with any kind of a balanced growth model, and they manifest themselves in that trade deficits and surpluses. This is what I’m saying as an economist.
Now, of course, from a politician’s perspective, there are other arguments for why they would point to it. What we have seen historically over and over again is that whenever you had these increases in these deficits and surpluses, you’ve had trade wars or calls for protectionism. That’s what happened during Reagan’s time, 1980s. That’s what led to the Plaza Accord and then all the adjustments that followed after that.
Then you also do worry about the possibility of crises. The Great Financial Crisis was preceded by growing imbalances. There was a sense in which all this big savings glut. All this money flushing around. All these large surpluses and deficits were part of the problem. Now I would say where we are now in this third wave of concern about imbalances.
To be clear, it’s not the imbalance itself. As an economist, I would say that it’s not the imbalance in itself. You don’t wake up and say, “This is what I’m trying to prevent. I’m trying to prevent us from having a deficit. I want us to have balanced trade.” I think that’s bad economics.
COWEN: Say China is channeling what would have been wage income into investment, and that’s plausibly the case. Now, it may be politically unstable in the sense that we Americans object to it, but that’s not an argument per se, right? We have a choice as to whether or not we should object to it. It doesn’t seem that rigorous to say, well, this will cause another financial crisis like 2008. There’s just not real evidence for that. Scott Sumner would say, “Let’s just be happy we have cheaper goods. We send them paper. We get back stuff and go our merry way.” Why is that wrong?
GOPINATH: A few things. Firstly, I could go into these differences between trade deficits and surpluses versus what I would call sectoral imbalances, or the fact that China’s running a big manufacturing surplus, which is different from a trade surplus itself, or that it has big EV production. What we do recognize, again, is that we do a pretty bad job in moving or helping workers that have lost their jobs in certain sectors.
COWEN: We’re at full employment now or very close to it.
GOPINATH: Again, we’re at full employment right now, but we’ve had this period of time when we had communities that were deeply affected by—not just trade—automation was a big part of it too. We don’t do a great job in terms of getting people back into jobs, and that can affect, depending upon your ideal welfare function for the country, if you care a lot about those people, then obviously in that case, that’s something that should matter in your policy decisions.
In the case of China, I would say firstly that, in both the case of the US and China, we’re very far from the world where countries are doing good policies, and this is all about comparative advantage, and this is all about this would be the outcome we would have in a world where every country was doing the right policy. We’re very far from that.
China’s surpluses are a reflection of things going wrong in China. It’s not a reflection of strength in China. It’s a reflection of weak consumption. It’s a reflection of misallocated resources going into different sectors. They did that with their property markets. Now they have a huge property market problem that they haven’t been able to fix in five years. They have this now with other markets, including EVs and the other sectors. They have the problem with inflation being too low.
They’re trying to do so called anti-involution policies, bringing companies together and telling them, “You’ve got to keep prices higher than what you’re doing right now.” This is not the world where they’re playing good policies, and this is all comparative advantage, and this is the outcome that we see. I wouldn’t push the argument that this is, “Oh, we should be just happier with cheaper goods from China.”
Economics throughout…
From the Master of Industrial Organization
Believing that AI will be incorrigible leads us to proposing the wrong solutions, including ones which are likely to increase the danger than decrease it. I think that an AI pause is using the wrong method to fix an ill-posed problem. The point of a pause would be to research AI until we have a deep enough theoretical understanding as to predict what an AI will do. I think this goal will always elude us. I cannot conceive of what this deep theoretical understanding would look like; I don’t think anyone actually does. It’s a call for a stop, not a pause.
The world would not stand still, though. The companies far behind the frontier now would doubtless learn more about what it is that the frontier AI companies are doing. If cooperation were to break down, we would have restarted the race with many more competitors. This is no improvement.
Further results on AI and labor market reallocation
This paper documents how artificial intelligence has affected stocks and flows in the U.S. labor market. Combining CPS and JOLTS data with AI exposure and adoption measures from OpenAI and Lightcast, respectively, we construct labor force stocks, worker flows, and market tightness by AI exposure and adoption. Since the introduction of LLMs, workers with high AI exposure and adoption have experienced larger declines in job-finding and job-switching rates than other groups, while their within-job activity switching has increased noticeably relative to others. The positive effects of AI on nominal wage growth and hours worked attenuate markedly in the post-LLM period, suggesting that LLM-driven reallocation has operated through within-firm task reorganization and a reconfiguration of labor inputs, alongside weaker demand for workers most exposed to AI. To quantify LLM-driven reallocation pressure, we construct individual-level hirability and separability indices and showthat dispersion in job-finding prospects has risen markedly since 2023, largely driven by the AI factors. The natural rate of unemployment—recovered from the trend components of unemployment inflows and outflows by AI exposure and adoption, as well as from a theoretical model of structural unemployment—is estimated to have risen by about 0.1-0.2 percentage point since the introduction of LLMs, albeit with considerable uncertainty.
That is from a new NBER conference paper by Hie Joo Ahn and Nicholas A. Carollo. Via Inclusive Productivity Network and Alex Imas.
The Tragedy of Nikole Hannah-Jones
Nikole Hannah-Jones famously sent her child to a predominantly black/lower-income public school in New York City. Now her child says she shouldn’t have been used as political fodder.
The essay makes for hard reading and I acknowledge NHJ’s courage in writing about her mistakes and the cost to her child. The piece is raw and true when talking about her personal choices, but the larger story in which NHJ embeds her personal history is mostly false. The problem isn’t funding. The failures she documents are failures of management and accountability, not lack of resources. NYC spends upwards of $40k per pupil on average, the highest of any large district in the country. Moreover, schools in NYC with lower-income students get more than the average. PS 307, where NHJ initially sent her child, is currently funded at just over 52k per student, far above the national average.
Nationally, there haven’t been big gaps in funding within states by race or income for decades. NHJ has reckoned with her failing her own child but she has not yet reckoned with the failure of her entire educational philosophy.
The role of ideology in blinding NHJ is dramatic. NHJ’s daughter earns high grades in her math classes but she fails standardized tests. Most parents, especially conservatives, know what that means. The classes are a lie. But NHJ is blinded by ideology and assumes it’s the standardized tests that are biased. It’s only when her daughter demands to go to a better school that she and her daughter confront the truth:
Najya knew very little algebra and had huge gaps in many of the building blocks of math that she should have learned in elementary school, like mastery of long division and fractions.
The confrontation is almost disastrous:
My child’s confidence wilted like an unwatered plant. She started to develop an almost debilitating anxiety around taking tests. She became sullen at school and began to act out. For the first time ever, I got messages from teachers about Najya’s behavior.
Fortunately, Najya battles back and recovers but much more could be said here about the costs of social promotion, DEI and mismatch on the so-called beneficiaries.
Ironically, NHJ invokes the heroic history of Black Americans integrating schools to justify keeping her own child in a segregated one. Painful.
NHJ thought that she and her husband–politically connected, astute people who were not afraid to speak up–could do well for their daughter and the other kids in the school. But in the end she has written a great piece on why voice fails–even a powerful voice–in the absence of the threat of exit. Hannah-Jones could have saved herself some grief and her child a poor education by reading my post The tragedy of Jonathan Kozol.
It’s been said that Ayn Rand’s heroes don’t exist, but her villains do. Case in point. Hannah-Jones says that she and her husband “felt an obligation to make educational decisions based on the collective good.” But she wasn’t just sacrificing herself for her ideology; she was sacrificing her child, who had no choice in the matter. “I don’t think she’s deserving of more than other kids,” she said in 2017. Nearly a decade later, Najya reminded her that in the abstract your child may not deserve more than other children, but she is nevertheless entitled to expect more from you. “Sometimes I wish instead of always thinking about other kids, you would have thought about me.” You don’t have to be a Randian to think that your child should not be sacrificed to the collective good, but it doesn’t hurt.
UK productivity higher than we had thought
UK productivity rose at almost twice the pace previously estimated in the decade after the 2008 global financial crisis, according to new official figures that make Britain look much less of an international outlier.
Output per hour worked, the main measure of labour productivity, grew by an average of 1.3 per cent per year between 2009 and 2019, the Office for National Statistics said on Thursday. The ONS had previously estimated average annual growth of 0.7 per cent over the period.
The figure is based on a new “component-based” methodology that has already been adopted by many other national statistics institutes. It draws on a range of data sources to improve the ONS’s count of both the number of workers contributing to UK output and the number of hours worked.
Here is more from Delphine Strauss at the FT.
My excellent Conversation with Annie Lowrey
Here is the audio, video, and transcript. Here is the episode summary:
Annie Lowrey’s new book, The Time Tax, argues that the most regressive levy in American life is the hours each of us must spend on hold, in waiting rooms, and filling out forms a competent state would have pre-filled — roughly fifty a year on average, and far more if you’re poor. Tyler spends much of this conversation pressing the opposite case, asking whether that bureaucracy is quietly serving a useful purpose by rationing knee surgeries that don’t work, deterring fraud, or screening for immigrants with gumption.
So Tyler and Annie hash it out over an hour, covering why TANF and other welfare programs are the worst offenders, the political economy of submerged benefits like the child tax credit, whether the postal service should be zeroed out over ten years the way Denmark did, whether the government should be nudging people out of rural areas, lessons from the COVID unemployment fraud, areas where the time tax is flat instead of regressive, which private sector time taxes are most onerous, whether AI agents will pay these taxes for us within five years, the logic of easy benefits plus randomized harsh audits, the case for less federalism, whether voting should be easier or harder, how the UBI studies changed her priors, where you can find the best moss in the world, her favorite example of Brutalist architecture, tattoos as permanent ephemera, Christianity’s role in liberalism and the post-Christian right, how reporting beats tourism, the time tax of friendship, what she’ll learn next, and more.
Excerpt:
LOWREY: The postal service and Social Security’s retirement programs. Those are both pretty good. Social Security also has other programs, SSI, which is mostly used by very, very low-income seniors with disabilities or who are blind. Disability insurance is run by the Social Security Administration. The retirement program, it’s less than 1 percent overhead. It’s great. It does all the work for you.
COWEN: Isn’t our whole postal service a time tax in the aggregate? Denmark, just this year, abolished its postal service. They don’t have any. Now, I understand we’re not in a position to do exactly the same, but shouldn’t we be moving away from postal service, basically zeroing it out over the next 10 years?
LOWREY: Did they make it so that it’s all digital? Did they digitize things?
COWEN: Well, I don’t know who the “they” is. Direct mail there has gone away.
LOWREY: Oh, yes, that’s interesting. I don’t know. I think in a high inequality country such as ours, where you still have a lot of people who don’t have smartphones and don’t have computers, that’s why I would be very concerned about the postal service going away.
COWEN: That’s why we need 10 years. You want to tax people, tax in the broad sense of the term, living in rural areas, if only because it’s much harder to have government help them, right?
LOWREY: Yes.
COWEN: If rural areas don’t get mail anymore, maybe that’s a good thing.
LOWREY: I don’t think that that’s a good thing for the people in the rural areas, though. There’s always going to be people in rural areas. As a general point, do you want the government to be encouraging people to not live in rural areas?
COWEN: Absolutely, that’s me. Welcome to the show.
LOWREY: That’s feels very nanny state-ish of you, Tyler.
COWEN: I don’t want to subsidize rural areas, and we do it in so many ways, including with our farm programs.
LOWREY: We do. We really, really absolutely do.
COWEN: It gets harder to help people with government. There’s a lot more market power in rural areas, like how many supermarkets are there, how many hospitals, probably just one, if that. Let’s get everyone into the suburbs, or heaven forbid, the cities.
LOWREY: I can’t imagine a less popular policy than that.
COWEN: Absolutely.
Interesting throughout, and full of good spirit. Again, here is Annie’s very good book The Time Tax: How Government Wastes Our Time — And How to Fix It.